MELBOURNE, June 20 (Reuters) - Base metals explorer Metals Australia MLS.AX has signed a preliminary deal to develop a graphite mine in Canada in partnership with a Chinese supplier to the battery industry for an unspecified amount of funding, it said on Wednesday.
China graphene and battery plates producer Weihai Nanhai Carbon Ltd will receive preferential supply options in return for helping to finance the Lac Rainy project in Quebec, Metals Australia said in a statement to the Australian Stock Exchange.
Under the terms of the memorandum of understanding (MOU), Nanhai Carbon will also help design a graphite product that meets its needs and those of other processors and makers of battery components.
Graphene, a derivative of graphite, is one of the strongest and most conductive materials. Its use can boost the capacity of lithium-ion battery cells and slash charging times, although the technology has not yet reached commercial production.
The deal has an initial term of one year, which can be extended as the companies work to arrange a binding agreement.
At full capacity, the Nanhai Group requires approximately 90,000 tonnes of graphite concentrate feed per year.
Nanhai is evaluating samples of graphite concentrate provided to it in January from the development site for potential use as "spherical graphite", a crucial form of the mineral used in lithium ion batteries, it said. The results will form the basis of further discussions with Metals Australia.
"(This) demonstrates the growing global demand for high-grade graphite concentrate," said Metals Australia Director Gino D'Anna.
Metals Australia is also investigating possible downstream processing opportunities, it said, without providing further details.
($1 = 1.3523 Australian dollars)